Payroll Outsourcing
As many of our longer-term clients are aware, we conduct annual reviews of the performance of our time and attendance systems to ensure that they are providing the best possible automation and accuracy. During a recent review, I asked a client whether there were any features they would like added to the system to enhance user experience or functionality. Jenny (the company accountant) mentioned a few reports that she would like customised, but her main concern was centred more around payroll than time and attendance.
I asked Jenny to elaborate on those concerns, and she told me that their weekly payroll is a high-stress event where everything happens in a single day often requiring less experienced staff to assist in meeting the payroll deadline.
As Jenny mentions, the actual process of producing the pays happens over just one day because, in most companies, the agreed payday is just a day or two after the payroll cycle finishes. At the and of the pay cycle, and often in a rush, the attendance data is processed, checked, approved, uploaded or keyed into the payroll software and a bank payment file is electronically processed.
Payroll staffing levels are set to accommodate the workload of a weekly payroll that must be completed in a day or so which often leaves a relatively low workload for the remainder of the week. The problem is that seasonal demands can significantly increase the casual workforce and make the workload almost unmanageable. When this happens, Jenny will pull admin staff members from other locations to assist in payroll, but that is disruptive and inefficient and often leads to payroll errors.
I asked Jenny if she had ever considered outsourcing her payroll. My experience was that payroll outsourcing could be on par with the cost of inhouse payroll when you take into consideration all cost factors such as the cost of your payroll software, training, compliance and reporting, payroll temporary staff and recruitment costs.
Additionally, when you outsource your payroll, you are leveraging off the expertise of an organisation that just does payroll processing. This means you gain their expertise in those areas and also the efficiencies of their systems. These less tangible but important factors are some many side benefits from outsourcing your payroll.
When I spoke to Jenny again just before writing this article, she had been using a payroll outsourcing company for a few months and had already seen the benefits. The payroll officer still had her HR functions to perform and, with more free time, she was able to impact positively, other cost areas such as workers compensation and labour outsourcing costs. The payroll office could now even take annual leave without sending Jenny and her team into a panic!
According to Jenny, the outsourcing of payroll was an excellent move that was cost-effective on its own merits and a decision she wishes she had made much earlier.
The Time & Attendance Consultant
